Strategic Management Theory Integrated Method

Question: Discuss about the Strategic Management for Theory Integrated Method. Answer: Introduction: From the provided case study, it has been identified that the global economic crisis of 2009 has resulted in a sharp decline in veneer and lumber sales in the Dubai market. The net profit for the organisation from the period 2005-2009 has been represented in the form of a graph as follows: The list of strategic alternatives, which could be used on the part of Chabros International Group to combat with the falling net margin of the organisation over the subsequent years, comprise of the following: Shutting down parts of the Serbian sawmill Expansion of business within the current operating markets Change in the product mix Market development in Morocco Evaluation of alternatives along with their pros and cons: The above-mentioned alternatives have been considered, in which the advantages and disadvantages of each alternative are briefly represented as follows: Chabros International Group by closing the Serbian sawmills would experience a reduction in employee base. As a result, it could be bale to save $40,000 each year in salaries. In this regard, Bergh et al. (2014) stated that such reduction would help in minimising excess capacity with greater focus on needed resources. The same number could be purchased from a low-priced supplier in Russia. However, the retrenchment of staffs might discourage the existing staffs associated with the organisation. Along with this, the investment of $10 million in sawmills would go in vain. Furthermore, Chabros International Group might lose competitive edge in the non-MENA areas and the potential Moroccan subsidiary. Expansion of business within the current operating markets: As the organisation operates in Dubai, Qatar, Saudi Arabia, Oman, Serbia, Lebanon nd Egypt, the prevailing legislations are well known. Thus, the market experience is of immense value for penetration in methods that would work (Hill, Jones and Schilling 2014). In addition, the costs would be minimal, since profiles are already developed about the product needs. However, the falling demand in the existing markets and lack of acquisition of new knowledge are the major drawbacks of this alternative. In addition, the existing markets buy superior quality veneers; however, Chabros require the customers to purchase lumber manufactured in Serbia. Chabros could focus on lumber by selling the same to different European nations, since it is cheaper to acquire. In addition, sawmill of Serbia has the capacity to supply lumber, since it could be picked easily. However, this is not the business core, as Chabros bid against for large projects in veneer in the past. The profit would further be minimised with the increase in restructuring costs. Alternatively, Chabros could focus on veneer due to its adequate experience in the market. In addition, the MENA areas prefer veneer and diverse range of business operations are in the areas, as Dubai is one of the largest customers of the organisation. However, such mix would lose focus on the European nations and Morocco. In addition, veneer is not a commodity unlike lumber and it comes in various qualities at various costs. Chabros has developed a positive brand image due to high quality products in its operating markets. Thus, this strategy would help in taking its products to the new market (Hitt, Ireland and Hoskisson 2012). This cost-effective strategy would help Chabros to experience sales increase in Morocco. However, wrong marketing strategy or biasness in the same could increase the costs and eventual decline of the subsidiary. Recommendation: Based on the above alternatives, the most effective solution for Chabros is to initiate a Moroccan subsidiary. The organisation would enter the new market of Morocco, since it offers many new opportunities with low level of competition. The organisation could utilise the additional capacity of lumber from sawmills for selling the same to the Moroccans due to high demand in the market. Thus, it is the least costly with high potential for enhancing sales in the long-run. However, the other strategies are developed on short-term basis. Morocco has been the strategic choice of the organisation in the long-run. In the future, it could access the markets of the neighbouring nations, which include Algeria and Tunisia. In terms of culture, Morocco is identical to Lebanon (Keupp, Palmi and Gassmann 2012). Therefore, any cultural issues could be easily resolved. This decision would help Chabros in selling its additional lumber to maintain its competitive advantage. Implementation plan: The Ansoff matrix could be used to implement the strategy of initiating a subsidiary in Morocco: Market penetration would be made by offering lower prices to enhance the market share to combat with the rivals. The product development of lumber and veneer in Morocco would broaden the scope of Chabros to find new customers and hit new segments The market development strategy would be to use the brand reputation of Chabros, which is relatively less costly to guarantee higher sales. Entry into other markets like Algeria and Tunisia with development in Morocco through diversification strategy by spreading business risk is the final step in the proposed implementation plan. Risk and mitigation strategies: The following risks have been identified for the selected strategy along with strategies to mitigate them: There is political instability in Morocco, which might limit the operational procedures of Chabros in the market. In order to deal with the situation, the organisation needs to ascertain the overhead costs from legal conformity, reporting, tax and staff compensation. Recruiting skilled personnel is another risk, which might minimise the organisational productivity of Chabros. In order to manage this risk, Chabros needs to check the backgrounds of the potential staffs and previous work experience before appointing the personnel for the Moroccan subsidiary. References: Bergh, D.D., Connelly, B.L., Ketchen, D.J. and Shannon, L.M., 2014. Signalling theory and equilibrium in strategic management research: An assessment and a research agenda.Journal of Management Studies,51(8), pp.1334-1360. Hill, C.W., Jones, G.R. and Schilling, M.A., 2014.Strategic management: theory: an integrated approach. Cengage Learning. Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2012.Strategic management cases: competitiveness and globalization. Cengage Learning. Keupp, M.M., Palmi, M. and Gassmann, O., 2012. The strategic management of innovation: A systematic review and paths for future research.International Journal of Management Reviews,14(4), pp.367-390. Mellahi, K. and Frynas, G., 2015.Global strategic management. Oxford University Press. 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